Happy New Year, Music Biz! You’re Still Totally Screwed

Now that 2008 is officially over, it seems we have no choice but to turn bravely around, slowly open our eyes, and cringe at the slow, sad decline of the music industry. There were a few bright spots, yes. Lil Wayne—a guy who’s made a career out of releasing his music for free—still managed to sell upwards of 2.9 million copies of Tha Carter III. Colplay’s Viva La Vida also went double-platinum, and Taylor Swift’s Fearless and AC/DC’s Black Ice both posted solid numbers. But these were not enough to stem the tide …

As The Wall Street Journal reported last night, SoundScan’s year-end figures show a 20 percent drop in sales of CDs—still the industry’s most profitable medium—from 449.2 million to 360.6 million units. Sales of U.S. albums, including digital downloads, were down 14 percent. Most of the declines came in the year’s last three months—this in the face of big releases by Kanye West, Nickelback, and, of course, Guns N Roses. It seems Chinese Democracy was no match for an American democracy in economic freefall. The music industry has now shrunk in seven of the last eight years, and with analysts predicting that CD sales will drop at a rate of 8 percent a year over the next five years, no end appears in sight.

So while we’re a sucker for physical media (especially if it’s 12 inches wide and made out of vinyl), we can’t help but feel arguments calling for the industry to move to digital downloading as its primary distribution mechanism have some weight behind them. As Mike McGuire, a VP at industry research firm Gartner, said recently on cdrinfo.com (via MBV), "By propping up the CD business, rather than fully investing in online distribution alternatives, the major labels and the larger music industry have neither succeeded in stamping out piracy nor done much to recreate the business models of the old ‘record business.’” It’s time, he says, for labels to focus on “digital first.” In a couple years, we may have no choice.